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Tips to Prepare Tax Statements for 2017

Membership, tax statements, 2017 taxes

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The passage of the Tax Cuts and Jobs Act of 2017 will bring a number of changes to the tax code and regulations for nonprofits beginning in 2018. But first you must prepare statements for the year we've just closed: 2017.

Tax statements provide a terrific stewardship gesture to your major, mid-level, and sustaining donors by thanking them for a year of support while providing a receipt for their gifts. Here are some tips to help you get your 2017 statements right.

Review the Rules

Review the IRS Guide for Charitable Contributions: Substantiation and Disclosure Requirements. It’s important to take a look before you get started so you’re up to speed.

Here’s the top-line data for 2017:

  1. Donors are responsible for providing the IRS a bank record or written communication for donations of $250 or more for which they intend to claim a deduction on their tax return.

  2. Your station or organization is responsible for providing written disclosure to donors who receive goods or services in exchange for a single donation of $75 or more.

    There is a “Token Exception” for “insubstantial goods or services” (such as a thank-you gift). To be deemed insubstantial, the Fair Market Value can not exceed the lesser of 2% of the payment or $107; or...

    Meets the following criteria: The donation is at least $53.50, and the thank-you gift bears your station’s name and/or logo and is valued at no more than $10.70.

Your station is required to provide a written disclosure or receipt for donations of $75 or more that are partly for goods or services and partly for a donation. (The IRS uses concert tickets as an example.) This is referred to as a “Quid Pro Quo” contribution.

To review these details, See IRS Memo RP-16-55 - Page 20, section .30

What information should you include on a tax statement? The IRS requires the following information:

  1. The name of organization
  2. The amount of cash contribution
  3. A description (but not the value) of non-cash contribution
  4. A statement that no goods or services were provided by the organization in return for the contribution, if that was the case; or a description and good-faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution.

Other details from the IRS:

  • A separate acknowledgment may be provided for each single contribution of $250 or more, or one acknowledgment, such as an annual summary, may be used to substantiate several single contributions of $250 or more.
  • There are no IRS forms for the acknowledgment. Letters, postcards, or computer-generated forms with the above information are acceptable.
  • An organization can provide either a paper copy of the acknowledgment to the donor, or an organization can provide the acknowledgment electronically such as an email addressed to the donor.

And, of course, you should consult with your tax preparer or counsel before instituting these recommendations. It’s become more difficult to locate this information in IRS memos and briefs than in previous years.

Sustainers

Sending sustaining donors a tax statement is a great idea, regardless of whether they received goods or services or made one or more $250 one-time donation(s). It helps summarize their support in one easy-to-use document and is another touchpoint to thank them for their commitment to your station.

For example, in 2017 MPR Membership will send email tax statements to all donors who gave up to $1,199, including sustainers, for whom they have a valid email. They will only send hard-copy tax statements to donors who give $240 -$1,199 for whom they don’t have a valid email address. Donors who gave $1,200 or more are handled by the major giving team.

Outsourcing the Work

KJZZ and KBACH in Phoenix offer their donors the ability to download their own tax statements through their e-member portals. This is an easy way to get information to donors when they want it.

Some stations have eliminated the time and work of generating tax statements themselves and instead use a mail house to do the job. Mail houses will generate copy specific to each combination of donor and thank-you gift. Greater Public’s direct mail collaborative is an example of one such mail house.

To ask or not to ask? Do you solicit a gift with your tax statements?

In a quick survey of stations, most said they do not solicit a gift in a tax statement. Of those who did, most often it was done as an upgrade request to sustaining members, or a business reply envelope was included without any formal request. We recommend using tax statements primarily as a valuable stewardship opportunity to connect with and thank donors for their support.

Download sample letters and email copy. 

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